Q2 company results: Key trends & developments

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With all Top 6 CHC marketers and several important mid-tier companies having now reported their Q2 results, it’s a good time to analyse some of the key consumer health trends that have emerged in the second quarter of this turbulent year. Most notable is the downturn in Europe’s CHC market in Q2 2020, after an especially strong Q1, while North America’s CHC market has proven to be more robust so far. Also of note is the strong rise in e-Commerce sales for several CHC marketers.

Europe: Medicine cupboards already stocked

Marketers with well-developed CHC portfolios in Europe reported how “destocking” of medicine stores built up in Q1 had impacted regional OTC sales in Q2. GSK reported low single-digit decline for its pain portfolio in Q2, largely the result of this pantry unloading trend and the weak performance of Voltaren in Europe. Likewise, Sanofi reported a 13% decline in CHC sales in Europe in Q2, citing “consumer destocking” and low pharmacy traffic as key contributors to the regional fall.

Bayer, reporting on the wider EMEA geography, said regional sales fell 8.2% in Q2 after strong consumer stockpiling in Q1, with Allergy & Cold and Digestive Health the two categories most affected. Likewise, Mylan reported a 6% fall in its sales in Europe in Q2, as did several smaller CHC marketers, including Boiron, which recorded a 21% quarterly decline in sales in France owing to fewer doctors’ appointments and pharmacy visits.

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North America: J&J and P&G benefit from geographic mix

Bayer and GSK both reported dynamic VMS growth in the region in Q2, while Sanofi cited the “strong spring allergy season”, which boosted its Xyzal brand, as a factor in better Q2 sales in North America compared to Europe. Marketers with CHC portfolios more focused on the US market performed well, notably J&J, which reported a 10.7% rise in OTC sales in Q2 thanks to strong growth of Tylenol and Zarbee’s Naturals.

Like J&J, P&G benefits from a clear geographic focus on North America, and reported strong growth in the region in Q2 as a factor behind the double-digit rise in sales of its Personal Health Care portfolio, with Vicks and several other brands gaining share. Other CHC marketers with a particular focus on the region, including Perrigo and Church & Dwight, also reported stronger quarterly results in Q2 compared to competitors.

e-Commerce: RB and Nestlé report high growth

Another factor in rising organic CHC sales for Perrigo in North America in Q2 was continued robust growth in e-Commerce, more than offsetting category declines owing to lower brick & mortar foot traffic. Two other marketers that cited the impact of e-Commerce in their Q2 results were RB and Nestlé. For RB, e-Commerce sales rose by 50%+ and now represent 15% of total Health net revenue, while for Nestlé e-Commerce sales grew by 48.9%, reaching 12.4% of total sales.

Are the leading CHC marketers investing in e-Commerce? Do they have online platforms for their brands? Find out in our report Digital Marketing & e-Commerce: Tapping the Potential of Online Sales and Digital Promotion in Consumer Healthcare.  To order your copy, or to find out more, please contact melissa.lee@NicholasHall.com.

Market Movers Q1: CCA, VMS brands among fastest movers

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In this week’s blog, we take a closer look at our newly published Market Movers data for MAT Q1 2020, which highlights the brands that performed best and worst in terms of value sales growth or decline in that period. Certain marketers like RB, which last week reported a 12% rise in its OTC portfolio in Q2 2020, have found success from having a well-positioned portfolio of power brands in fast-growing, Covid-driven CHC categories, such as cough & cold remedies (Mucinex), immunity supplements (Airborne) and antiseptics & disinfectants (Dettol).

P&G also reported double-digit organic growth of its Personal Health Care portfolio in Q2 (fiscal Q4), powered by Vicks, which continues to gain share. Vicks NyQuil / DayQuil combo packs were among the six fastest-growing brands in MAT Q1 2020, along with one of China’s leading systemic cold & flu remedies, 999 Gan Mao Ling. VMS products also featured strongly among the Top 6 fastest-growing brands, with Olly and Emergen-C performing well in the US market thanks to their stress / immunity positioning, and Double Whale Vitamin D Drops achieving high growth in China. J&J’s Tylenol, the No.1 analgesic brand globally, also continues to produce dynamic Covid-driven growth.

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Asia-Pacific was the region that underperformed most in MAT Q1 2020 – achieving just 3.4% growth vs 6.3% for North America and Europe – so it is no surprise that five of the Top 6 worst-performing brands are from China or Japan. Tonics & cure alls was the subcategory most responsible for Asia-Pacific’s relatively low growth, with category sales down 25% in China, owing to issues with donkey breeding that have resulted in rising raw material costs and subsequent price rises, affecting two brands in particular – Dong-e E-jiao and Fu Fang E Jiao Jiang – while Hong Mao Medicated Wine was affected by negative claims.

OTC tonic drinks is another VMS subcategory hit by declining sales, with a continued downturn in Japan where the old, male consumer base is retiring and brands face competition from energy drinks. Takeda’s Alinamin EX was among the brands that declined fastest in MAT Q1 2020. Another CHC subcategory affected by weaker sales in Q1 was antacids, as a result of the withdrawal of ranitidine-based antacids from the market owing to concerns around NDMA in the formulation. Sanofi’s Zantac was among the key brands impacted, with Zantac 150 in sharp decline in the US market.

Today is the last chance to pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief at the discounted rate and save up to GB£1,800! Contact melissa.lee@NicholasHall.com to order or find out about special discounts available on purchases of more than one report title!

Top 2 brands powering global CHC growth

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Our blog this week looks at the performance of the Top 10 global consumer healthcare brands, in the context of the 5.6% upturn for the global CHC market in the year to end-March 2020. Inevitably, analgesics and cough, cold & allergy brands have enjoyed the highest rates of growth thanks to Covid-driven demand, with the Top 2 global brands, Vicks (+15.4%) and Tylenol (+18.3%), performing particularly well.

P&G’s CCA range Vicks now generates global sales of nearly US$1.5bn, and its double-digit growth in the MAT Q1 2020 period was powered by dynamic performances in Latin America and North America. In fact, high growth in the US market was behind the double-digit global upturns for both Vicks and J&J’s Tylenol, the latter generating sales of close to US$1bn in its home market.

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GSK markets four of the other Top 10 brands, including its powerful triumvirate of painkillers – Advil, Voltaren and Panadol. Growth for Advil and Panadol improved markedly in Q1, thanks to accelerated purchases as a result of Covid-19, while Voltaren experienced flat sales in the quarter. That said, the recent US Rx-to-OTC switch of Voltaren Arthritis Pain is expected to provide a significant boost to brand sales in Q2.

Halls also saw growth accelerate in Q1, although not to the same extent as other CCA brands like Mucinex, which rediscovered growth during the first quarter of 2020 to leap ahead of J&J’s Nicorette to reclaim the global No.9 spot. VMS brands Centrum and Nature Made missed out on the overall surge in demand for CHC products in Q1 – in general, growth in the VMS market has been focused primarily on immune supplements and vitamin C products.

Pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief report before 31 July to save up to GB£1,800! Please contact melissa.lee@NicholasHall.com to order or to find out about special discounts available on purchases of more than one report title!

e-Commerce CHC growth accelerating

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All the signs point to accelerated growth for the internet & mail order channel of the global CHC market in the first quarter of 2020. In 2019, the overall global retail CHC market recorded growth of 3.9%, while internet & mail order sales achieved much faster growth of 12.4% that same year, and the channel is forecast to rise by 22.5% in 2020.

Several leading CHC companies reported dynamic e-Commerce growth in their latest quarterly results, with RB reporting a strong e-Commerce upturn across all major platforms and market places, particularly in Greater China, led by Dettol and Infant & Child Nutrition (IFCN), and North America, with Mucinex and VMS in particular making good progress. Likewise, P&G reported 35% growth for e-Commerce channels in its fiscal third quarter (calendar Q1 2020), translating into around 10% of company business. CFO Jon Moeller acknowledged social distancing orders were a key driving factor, but still expects a permanent shift in the portion of business conducted online post-pandemic.

GSK is another company that has been boosted by increased online demand for its analgesics, CCA and VMS products. The company reported that the impact of Covid-19 varied across regions in Q1 2020, as a result of differing government actions and consumer behaviour. USA, UK, Australia and several other markets benefited from increased demand and shopper activity in both traditional retail and e-Commerce channels, which resulted in accelerated purchases across all categories, while some markets, including India and China, were negatively impacted by mandated retailer shutdowns.

Likewise, the benefits of increasing trade channel liberalisation will not be shared equally among all CHC marketers. While many leading companies are well prepared for this increasing consumer appetite for internet & mail order purchases, some marketers with a more limited e-Commerce profile may find it hard to adapt to this shift in demand, especially if they’re highly leveraged in brick & mortar retail outlets, as is the case – for example – with Prestige Brands and the convenience store channel in the USA.

Coming this month — with two timing options on 22 and 23 July — is an all-new Hot Topic webinar focusing on COVID-19: The Impact on the Global and Regional CHC Markets. To find out more or register to join your preferred session, contact elizabeth.bernos@NicholasHall.com.

Q4 update: Middle East & Africa highlights

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One key feature of your CHC DASHBOARD subscription is exclusive reporting on the consumer healthcare market in the Rest of World region, predominantly the Middle East & Africa. This dynamic region now accounts for almost 7% of the global CHC market, and produced continued strong growth in 2019, with sales up 7.0% to total US$9.6bn. Three countries in the region – South Africa, Turkey and Saudi Arabia – rank 20th, 24th and 25th respectively in terms of CHC market size.

Company Watch: Unsurprisingly, dominant global No.1 GSK is the leading CHC marketer in the region, as it is in all regions except Latin America. Multinationals Sanofi, Bayer and RB also feature in the regional Top 5, and each of these companies produced growth in 2019 in excess of the regional average of 7%. South Africa’s No.1 CHC marketer Adcock Ingram is the only local company to feature at the top of the rankings, while Abdi Ibrahim sits just outside the Top 5.

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Category Watch: Strong growth for analgesics (+8.1%) and Derma (+8.1%) helped ensure the region’s impressive rise in 2019. Three of the Top 5 regional analgesic brands – Panadol, Voltaren and Grand-Pa – are marketed by GSK, while RB markets another of the Top 5 regional CHC analgesic brands, Nurofen. As for Derma, a strong upturn for the leading dermatologicals category in the region, wound healers (+11.9%), was powered by Bayer’s Bepanthen / Bepanthol and Madecassol brands.

Brand Watch: Thanks to M&A activity in recent years, GSK now markets four of the Top 10 brands in the region, with No.3 Otrivin and No.8 Centrum added to the company’s existing key brands, Panadol and Voltaren. RB also markets multiple brands in the regional Top 10, with analgesic Nurofen, antacid Gaviscon and sore throat remedy Strepsils all featuring at the top of the rankings. However, the fastest-growing brand in the Top 10 in 2019 was Galderma / Nestle’s eczema & psoriasis treatment Cetaphil.

We are pleased to announce that Nicholas Hall’s CHC Yearbook 2020 is now published digitally, with print copies landing on desks next week! With the latest facts & figures, it offers the most up-to-date and fully-informed picture of the CHC industry around the world. To order or explore digital licence and multiple copy discount options, please contact melissa.lee@NicholasHall.com.

Combination OTC painkillers gaining ground

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Following the approved switch of Voltaren Arthritis Pain by the FDA in mid-February, there was more positive news for GSK’s US analgesics portfolio over the weekend with the FDA approval of Advil Dual Action. This is the first FDA-approved OTC combination of ibuprofen and paracetamol (acetaminophen) in the USA, and GSK is expected to launch the product later this year.

Franck Riot, Head of R&D at GSK Consumer Healthcare, said: “For decades, many consumers have been using ibuprofen and acetaminophen (paracetamol) to get the benefits of both active ingredients when safely treating their headaches, muscle aches, backaches, arthritis and other joint pain. Now Advil, the No. 1 selling OTC pain reliever, will offer US consumers the first-ever alternative option – a single, fixed-dose combination pain reliever.” According to the reported clinical research, this fixed-dose combination achieves superior efficacy compared to the individual monocomponents of ibuprofen (250mg) and acetaminophen (500mg) alone.

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Dolostop Plus, another recent combination launch

Another combination OTC painkiller we tracked recently, formulated with both ibuprofen and paracetamol, is Kern’s September 2019 launch of Dolostop Plus in Spain. Indicated to provide symptomatic relief from mild to moderate pain in adults, these film-coated tablets are formulated with paracetamol 500mg and ibuprofen 150mg, with a stated dose of 1-2 tablets every 6 hours, and claimed to be the first and only OTC paracetamol and ibuprofen combination available in Spain.

In several markets around the world, such as the UK, Russia, Japan and Indonesia, combination paracetamol + ibuprofen OTC remedies are already well-established, but these recent developments in the USA and Spain point to growing acceptance among global regulators about the safety of fixed-dose OTC analgesic combinations.

Where will NPD take the CHC market in the future? Find out in our upcoming report, Innovation in CHC: NPD & Innovation in CHC under the Spotlight! This report, drawing on Nicholas Hall’s CHC New Products Tracker, assesses the global picture of CHC innovation in 2019, featuring ingredient trends, delivery format trends, analysing innovation trends by region and by marketer, plus much more! To pre-order your copy and save with the pre-publication discount, or for more information, please contact melissa.lee@NicholasHall.com.

GSK and Alcon get FDA approval for US switches

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Following on from our recent blog highlighting the need for a new wave of Rx-to-OTC switches to kickstart growth in the global consumer healthcare industry, this week we cover the welcome news that the FDA has approved three drugs for non-prescription use. As well as GSK’s topical analgesic gel Voltaren Arthritis Pain (diclofenac sodium 1%), two Alcon eye care allergy products (available as solution / drops) have also switched to OTC status – Pataday Twice Daily Relief (olopatadine 0.1%) and Pataday Once Daily Relief (olopatadine 0.2%).

Karen Mahoney, Acting Deputy Director of the Office of Nonprescription Drugs at the FDA’s Center for Drug Evaluation & Research, said: “Approval of a wider range of non-prescription drugs has the potential to improve public health by increasing the types of drugs consumers can access and use that would otherwise only be available by prescription. This includes providing the millions of people that suffer with joint pain from arthritis daily over-the-counter access to another non-opioid treatment option.”

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Olopatadine is available OTC in a handful of other countries worldwide, but this is the first time it’s been switched in a major market. One of the countries where the ingredient can be purchased without a prescription is Singapore, which approved the Rx-to-OTC switch of olopatadine 0.1% and 0.2% in December 2016. More recently, Poland’s Office for Registration of Medicinal Products, Medical Devices & Biocidal Products (URPL) approved the Rx-to-OTC switch of Polfa Warszawa’s Starelltec Alergia eye drops (olopatadine 1mg / ml; 5ml bottle) in July 2019 and Adamed’s Oftahist eye drops (olopatadine 1mg / ml; 5ml bottle) in November 2019.

Voltaren currently ranks fifth among the world’s leading consumer healthcare brands, according to CHC DASHBOARD, and this switch could see it move up the rankings and even move ahead of its new GSK stablemate Advil into the No.3 position globally within the next few years. While the US switch of Voltaren has long been mooted, the news is all the more welcome at a time when the world’s No.1 CHC market is in desperate need of an injection of growth, and US arthritis sufferers are also in need of a wider pool of OTC non-opioid treatment options.

For the full story, be sure to read tomorrow’s edition of CHC.NewDirections, a weekly e-newsletter sent out every Tuesday. CHC.NewDirections focuses on innovation, science and regulation, and coverage spans Rx-to-OTC switch, CBD, relevant medical research, probiotics, medical devices, digital health / AI, e-cigarettes and much more! For more information, or to arrange a free trial, please contact Melissa.Lee@NicholasHall.com

GSK and Sanofi seek to stand alone

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Structural reorganisation is on the agenda of two of the world’s leading CHC marketers in 2020. GSK’s consumer health tie-up with Pfizer in August 2019 was last year’s major M&A development and now the company’s next ambition is to list the new CHC business on the London Stock Exchange. As for Sanofi, the company unveiled a new strategy just before Christmas, including making Sanofi Consumer Healthcare a standalone business. In the meantime, both companies continue to trim their CHC portfolios.

In December 2019, Pfizer agreed to divest its topical pain management business, ThermaCare, to Italian-based Angelini for an undisclosed sum, reports apotheke.adhoc.de. In July 2019, the European Commission approved the consumer healthcare merger of GSK and Pfizer, conditional upon the global divestment of ThermaCare. The agreement follows Angelini’s acquisition of BoxaGrippal systemic cold & flu remedy and the Heumann herbal medicinal tea range from Sanofi in August 2019.

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Meanwhile, it was announced this month that BI is to sell Buscopan antispasmodic and Buscofem menstrual pain analgesic to Hypera Pharma in Brazil for Rs1.3bn (US$329mn). The deal, which is subject to approval by Administrative Council for Economic Defence (CADE), is in line with Hypera’s strategy of strengthening its portfolio with “established brands with high growth potential”. Under the terms of its 2017 business swap with BI, Sanofi has acquisition preference for the brands and could still pose a counteroffer. However, industry sources suggest that the company is unlikely to exercise this right.

In December 2019, Sanofi unveiled a new strategy to drive innovation and growth, focusing on three core global business units: Specialty Care, Vaccines and General Medicines. Consumer Healthcare will be a standalone business unit with integrated R&D and manufacturing functions. CEO Paul Hudson explained: “Our objective for the CH business is to unlock value and entrepreneurial energy by growing faster than the market over the mid-term. We believe the new standalone structure, coupled with plans to accelerate the OTC switches for Cialis and Tamiflu, will position the business well to accomplish this ambition.” Hudson added that the Rx erectile dysfunction treatment and flu remedy are expected to switch by 2026, adding around US$1bn to Sanofi’s top line.

Are you looking to make a strategic or bolt-on acquisition? If so, our Consultancy team would be happy to have a confidential discussion with you. Our specialist team can negotiate the successful acquisition of companies and brands, asset swaps, fostering and financing. We work with a number of strategic and financial partners to evaluate potential opportunities – for buyers and sellers – in the M&A, licensing and fundraising space. To find out more, please contact ekaterina.panteleeva@NicholasHall.com.

CHC Adjacencies Fuelling Digital Marketing Innovation

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A new report from Nicholas Hall examines effective digital marketing strategies for consumer health players and the fast-growing online channel for OTCs. In this week’s blog, we examine which consumer healthcare categories, brands and companies most fully embraced social media marketing in 2019, and summarise the report’s findings.

Given the tight regulations surrounding the promotion of registered OTC medicines on social media, it’s no surprise that the subcategories where we’ve recorded the most digital marketing activity in 2019 – using our OTC New Products Tracker tool – were adjacent categories in Lifestyle OTCs, VMS and dermatologicals. Cannabis / CBD recorded the highest number of innovations backed by social media promotion in 2019, followed by lip care and probiotics.

Of the Top 20 brands that recorded the highest number of innovations in 2019 backed by social media promotion, lip care products Eos (Eos) and ChapStick (formerly Pfizer, now GSK) were at the top of the tree. For example, Eos Vampire Kiss was supported by an Instagram campaign in the run-up to Halloween. CBD companies such as Hilo, CBDfx and Ignite – the latter backed by professional poker player and social media celebrity Dan Bilzerian – have also used digital marketing in 2019 to support their new products. Among VMS brands, Irwin Naturals, Zarbee’s Naturals (J&J) and Olly (Unilever) were all well-supported on social media, especially Facebook.

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Below are some of the findings from the new Nicholas Hall report:

  • It is vital that approaches to digital marketing are differentiated across digital and social media channels
  • Most consumers trust social media for healthcare advice, making an engaging social media strategy critical
  • Rapid adoption of digital technologies and evolving shopping behaviours are transforming e-Commerce into a key channel in consumer healthcare
  • Consumers will generally shop where it is most convenient, so understanding where they are shopping online is vital
  • Mobile is consumers’ constant companion so all content should be accessible on mobile devices
  • Since the virtual shelf is infinite, standing out from competitors online requires orchestrated brand communication

Comment from Ian Crook, Managing Editor, Nicholas Hall’s Reports: When considering how to target consumers via digital channels, marketers must note that different demographic groups use different social media platforms, and in diverse ways. Content consumption is diversifying just as audiences are broadening; the modern consumer leads a very busy life and can be easily distracted, posing challenges to effective engagement. Fostering consumer connections is vital, and whichever means of communication is used – live streaming, chatbots, social media messaging, etc – interacting with consumers is essential. Marketers cannot win everywhere or invest in all platforms, so choosing the appropriate medium is an important step in planning an effective digital campaign.

The new report features many more findings, backed by relevant case studies, including a look at consumer influencers, the benefits of a direct-to-consumer strategy, the digital strategies of the OTC Top 10, as well as the differing regulatory situation for online sale of medicines across markets, plus much more. To purchase your copy of Digital Marketing & e-Commerce, or for more details, please contact melissa.lee@NicholasHall.com.

Highlights from OTC DASHBOARD’s Q2 update

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The latest quarterly report on the global OTC market is now available on the OTC DASHBOARD website, including data & trends on the market’s performance at a global, regional and Top 20 country level in the year to end-June 2019. Here we highlight some of the key topline trends from this Q2 update, selecting one major global development from each of our company, category and brand watch sections.

Company Watch

M&A activity completed in 2019 has seen a reshuffle in the rankings of the top global OTC marketers; most notably, GSK is now by far the No.1 consumer healthcare marketer globally, following the closure of its OTC merger with Pfizer in August 2019, giving it a 6.8% share. This consolidation has led to the emergence of new competitors, most notably By-Health, which has broken into the global Top 20 and now claims 15th spot.

While decelerating growth in Emerging Markets, especially China, has been a key macroeconomic trend affecting the wider economy and the consumer healthcare industry, one company that has bucked the trend with accelerating growth (+31%) is By-Health. China accounts for over 90% of By-Health’s OTC portfolio turnover, with Australia accounting for the remainder. In China, the company fields brands including dynamic longline range By-Health and glucosamine supplement Keylid, backed by an intensive A+P strategy.

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Category Watch

Analysing the performance of the major OTC categories at a global level, gastrointestinals enjoyed the fastest growth in the MAT Q2 2019 period, with sales up 4.9%. Antinauseants (+15.9%) performed especially well, recorded a strong performance in Asia-Pacific, the largest regional market for GIs, owing to increasing levels of travel and changing diets.

Antidiarrhoeals, antispasmodics & IBS remedies and liver & bile remedies were the other best-performing categories, powered by new product innovation, as explored more fully in our Q2 update. One cloud on the horizon for GIs are the global concerns and recalls affecting antacids containing ranitidine, after some medicines were recently found to contain a nitrosamine impurity called N-nitrosodimethylamine (NDMA) at low levels — see our previous blog for more details.

Brand Watch

Two OTC brands have global sales of over US$1bn — Vicks (P&G) and Tylenol (J&J) — and both continue to outperform the global OTC market. No.1 Vicks produced above-average growth of 5.7%, despite difficult conditions in the global cough, cold & allergy market.

A strong return to growth in North America for Vicks was at the heart of this upturn, allied with continued strong growth in Latin America, helping to offset the moderate continued decline in Europe. A major factor driving faster growth in North America for Vicks is the sedative & sleep aid range Vicks ZzzQuil, which was boosted by the US launch of a new Pure Zzzs line in 2018. This range has been extended further with Pure Zzzs Kidz in Q3 2018 and several beauty and de-stress gummy supplements in 2019.

Whether you are in the office or on the go, you can access reliable CHC data and trends from OTC DASHBOARD, accessible on tablet, smartphone and desktop, and covering 63 markets across the world. Contact Hannah.Burke@NicholasHall.com to find out how you can benefit from OTC DASHBOARD by setting up a free trial today!